Personal Finance

Is Cypress Semiconductor's Dividend Safe?

CY Free Cash Flow (TTM) Chart

Cypress Semiconductor (NASDAQ: CY) has undergone a number of changes in the last two years, which has put the business under pressure lately. The company pays an attractive dividend, a rarity in the semiconductor space. The short-term concerns have led to some worry over the safety of that dividend. Here is what investors need to consider.

CY Free Cash Flow (TTM) Chart

Data by YCharts .

Should investors buy because of the dividend?

The company has made no indication that its cash payout to investors is at risk of getting sliced and diced in spite of the short-term squeeze, and the semiconductor company continues to execute its rebound strategy.

That being said, I wouldn't hold my breath for any raises anytime soon. The main story here is Cypress' transformation as it builds out its new IoT business and looks for ways to cut costs to boost the bottom line. Even though that yield is a nice bonus, the real reason to buy Cypress is for the potential stock price appreciation if the current rebound efforts pay off.

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Nicholas Rossolillo owns shares of Cypress Semiconductor. The Motley Fool owns shares of and recommends Qualcomm and Skyworks Solutions. The Motley Fool has the following options: short January 2017 $75 calls on Skyworks Solutions. The Motley Fool recommends Cypress Semiconductor and Intel. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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